KUALA LUMPUR: The Employee Provident Fund (EPF) is now focusing on supporting members to rebuild their savings for their future retirement, following the special withdrawal facilities that have been made available to help members cope with the health and economic crisis of Covid-19.
In a statement, the retirement savings fund said the withdrawal facilities were exceptional in nature and were introduced when the pandemic severely affected the local economy.
“These withdrawals, namely i-Lestari, i-Sinar and i-Citra, disbursed a total of RM 101 billion to more than 7.4 million members, nearly half of the total number of members of EPF.
“Although they provided some financial relief to members during the pandemic and various movement control orders, the withdrawals inevitably led to 6.1 million members now having less than RM 10,000 in their EPF accounts.
“A total of 3.6 million members have less than RM 1,000, which makes them vulnerable and unprotected for their retirement,” he said.
The EPF said the decline in savings is of particular concern to Bumiputera members, as they made up 78 percent of withdrawal seekers.
As a result, 4.4 million or 54 percent of Bumiputera members now have less than RM 10,000, and two million or 25 percent have less than RM 1,000 in their EPF account.
He noted that the distribution of savings has become increasingly skewed, where the poorest 40 percent of EPF members (around 5.0 million members) have seen their savings fall by 38 percent. at only RM 8 billion, resulting in a median savings balance of RM 1,005.
The middle 40 percent also saw their savings reduced by 18 percent to RMB155 billion, a median balance of RM24,995.
Only the richest 20 percent of members under the age of 55 saw their savings increase, but that translates to a median of RM 152,043, or the equivalent of RM 633 per month for 20 years.
“The withdrawal facilities have left 73 percent or nearly three-quarters of members in serious condition that they have insufficient funds to retire above the poverty line,” he said.
The EPF estimated that members will need to work an additional four to six years to recoup the savings that were used up during the pandemic.
He pointed out that the percentage of members reaching the basic savings threshold (RM 240,000 at age 55) had dropped significantly from 36% in 2020 to around 27% by the end of this year.
As such, future withdrawals due to exceptional circumstances will need to be carefully considered in order to safeguard the future of participants and replenish their retirement funds.
“With the measures put in place to support the economic recovery and stimulate employment, the EPF hopes that this will help to some extent to meet the needs of the population,” he said.
The EPF noted that the recently tabled 2022 budget includes an allocation of 8.2 billion ringgit for Bantuan Keluarga Malaysia (BKM) and 4.8 billion ringgit for the Jamin Kerja Keluarga Malaysia (JaminKerja) initiative.
The 2022 budget also included a number of measures to help the population, demonstrating the government’s strong position in strengthening the social protection program for Malaysians.
This can also be seen particularly in the continuation of the i-Saraan and Kasih Suri Keluarga Malaysia incentives, EPF said.
He also said that these efforts go to some extent in bridging the gaps in the country’s social protection system for vulnerable members of society, ensuring that they have access to at least a minimum standard of living, even for long periods of time. unprecedented periods.
“The social protection program is overseen by the Malaysian Social Protection Council (MySPC), chaired by Prime Minister Datuk Seri Ismail Sabri Yaakob, and is currently considering fundamental reforms of the national social protection system.
“The EPF fully supports these measures and will work closely with the government to ensure a secure and protected future for our members and the population,” he added. – Bernama